Current account deficit at all-time high of 6.7% in Q3

India's current account deficit (CAD) touched a record high of 6.7% of GDP in the October-December quarter, mainly on account of widening trade gap.

The CAD, which is the difference between inflow and outflow of foreign currency, "widened from 5.4% in Q2 (July-September) to a record high of 6.7% of GDP in Q3, driven mainly by large trade deficit", Reserve Bank of India said in its report on Balance of Payments.

The report said while the merchandise exports did not show any significant growth during the third quarter ending December 2012, the imports shot up by 9.4%, spurred largely by oil and gold imports.

The trade deficit, the RBI said, widened to $59.6 billion in third quarter, up from $48.6 billion in the corresponding quarter a year ago.

Finance minister P Chidambaram in his budget speech had said: "my greater worry is the CAD". He attributed the rise in the CAD to factors like excessive dependence on oil imports, the high volume of coal imports, passion for gold and slowdown in exports.

During April-December 2012, CAD stood at $71.7 billion accounting for 5.4% of GDP as against $56.5 billion (4.1% of GDP) in the same period of 2011.

According to RBI report, CAD in the Q3 rose by over 61% to $32.6 billion, from $20.2 billion in the corresponding quarter last fiscal.

The central bank said the surge in capital inflows, mainly on account of portfolio investment, would help in financing the higher CAD.

The FII inflow during the quarter rose to $8.6 billion from $1.8 billion a year ago.